The US has again warned that the Government’s procurement processes are “particularly susceptible to corruption”, with the renewal of some public sector contracts left outstanding for more than a year.
The State Department’s annual investment climate statement on the Bahamas, released this week, repeated concerns it has raised for the past three years over “a lack of transparency and undue political interference” with government procurement contracts.
A perceived lack of government accountability and transparency featured frequently in the US assessment of the Bahamas, which argued that anti-corruption laws were “inconsistently applied”.
The report added that this year’s prosecution of former Bahamas Electricity Corporation (BEC) Board member, Fred Ramsey, for bribery and corruption-related offences was the first such action brought under the Prevention of Bribery Act for 27 years.
Pointing out that the Government had failed to meet its own deadlines on “highly-publicised” bidding processes, the US State Department again criticised the “opaque” nature of public tenders and the absence of any appeal/review process for contract awards.
The timing of the annual US report’s release is unwelcome for the Bahamas, which is trying to stave off a further downgrade of its sovereign creditworthiness by Moody’s.
The rating agency has warned it may slash this nation to ‘junk’ status by end-August, costing it its current investment grade standing, and the ‘ease of doing business’ and foreign direct investment (FDI) will be two key areas they target.
“The procurement process is particularly susceptible to corruption, as it is opaque, contains no requirement to engage in open public tenders, and does not allow award decisions to be reviewed,” the US investment climate statement blasted.
“The Government has laws to combat corruption of, and by, public officials, but they appear to be inconsistently applied. Reports of corruption, including allegations of widespread patronage and the routine directing of contracts to party supporters and benefactors, have plagued the political system for decades.”
Leslie Miller, the outspoken MP for Tall Pines, admitted that the awarding of government contracts to party supporters, family members and cronies had effectively become ‘a way of life’ in the Bahamas.
Responding to a previous US report, he described the Bahamas’ system of patronage, and the awarding of government contracts to family and political supporters, as the most natural thing in the world, asserting that it will “never stop” because politicians must “do what they have to do” to win elections.
Bahamian taxpayers, though, are the biggest losers from such practices as they are consistently denied ‘value for money’ by contracts awarded to parties who may not be the ‘best bidder’.
Such a ‘patronage’ system, which all Bahamians know exists, also undermines the creation of a meritocracy-based society, plus notions of fairness and social equity.
Meanwhile, sticking with public procurement, the US report reiterated: “Some US companies have alleged a lack of transparency and undue political influence with government bidding and procurement processes. There is no requirement to engage in open public tenders, and award decisions are not subject to review.
“The Government has implemented procurement procedures in the management of funds from international lending agencies, but has not yet implemented best international practices for the management of national finances.
“In several highly publicised requests for proposal (RFPs), the Government has not met self-imposed deadlines, and contract renewals have been pending for 12 months or more.”
The US State Department gave no examples, but the BEC/energy sector reform process, initially launched in August 2013, was targeted for completion by summer 2014. After switching its format from ‘splitting BEC in two’ to a management contract, the process was eventually concluded in February 2016 - almost two years later.
And as for ‘pending contract renewals’, BISX-listed Consolidated Water has been waiting almost three years to find out whether the Christie administration will renew its operating contract for the Windsor reverse osmosis plan for a further five years, or hand the facility to another company.
“Successive governments sometimes review contracts executed by previous administrations, although government officials assert that the majority of contracts are not reviewed or altered in any way. However, the [US] Embassy is aware of instances where contracts have been cancelled,” the State Department report said.
“Other areas of concern noted by companies include the discretionary issuance of approvals and licenses from various government authorities. Companies complain that in some instances, these approval processes can be opaque with no possibility for review or appeal of a decision.”
The existing public procurement process, governed by the Public Procurement Act and Financial Administration and Audit Act 1973, provide significant flexibility and latitude in the awarding of public sector contracts.
Those worth less than $50,000 can be approved by a single Cabinet minister, while those valued at between $50,000 and $250,000 can be awarded by the Tenders Board, which is chaired by the Minister of Finance. Tenders for contracts greater than $250,000 have to be approved by the Cabinet.
The US report acknowledged that the Christie administration has committed to “modernising and reforming government procurement” with assistance from the Inter-American Development Bank (IDB).
“Some US and Bahamian companies also complain that the tender process for public contracts is not consistent, and that it is difficult to obtain information on the status of bids,” the report added.
“Government of the Bahamas officials have told the [US] Embassy that the Government is preparing legislation to address concerns related to its investment policy and public procurement regime.”
Previous investment climate statements have sparked controversy, with a variety of Government ministers hitting back at their content, and asking the US government to provide specific examples to back up their concerns.
Sir Franklyn Wilson, the Arawak Homes and Sunshine Insurance chairman, last year told the US to “cure yourself” in response to the State Department’s annual human rights report, arguing that there was more corruption per capita in America than in the Bahamas.